The Journal Entry a Company Records for the Payment of Interest

question 102

Multiple Choice

The journal entry a company records for the payment of interest, interest expense, and amortization of bond premium is

• A) debit Interest Expense, credit Cash and Premium on Bonds Payable
• B) debit Interest Expense, credit Cash
• C) debit Interest Expense and Premium on Bonds Payable, credit Cash
• D) debit Interest Expense, credit Interest Payable and Premium on Bonds Payable

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Definitions:

Capital Balance

Represents the amount of funds contributed by investors or owners plus retained earnings in a company.

SEC

The U.S. Securities and Exchange Commission, a federal agency responsible for enforcing federal securities laws and regulating the securities industry.

Bonus

An additional payment or reward given to employees as an incentive or reward for performance.

Partnership

A form of business organization where two or more individuals agree to share the profits and losses of a business venture.